Your Evening Briefing: US Inflation May Be Slowing Again

Technology shares extended the week’s US stocks rally after a key measure of inflation cooled last month, good news for the Federal Reserve as it continues its fight to bring down prices while avoiding a recession. The Fed’s preferred inflation gauge—the personal consumption expenditures (PCE) price index—rose just 0.3% in February, which was slightly below the median estimate. Still, the PCE price index was up 5% from a year earlier, which while a deceleration from January remains far higher than the Fed’s ultimate 2% goal. But US year-ahead inflation expectations receded further, to the lowest in nearly two years, according to the final March reading from the University of Michigan. Wall Street hailed the numbers with the S&P 500 rising 1.4%. That brings its weekly gains to 3.5%, the most since November, while the tech-heavy Nasdaq 100 gained 1.7%, helping notch its biggest quarterly gain since June 2020. “Overall, it was a round of data consistent with the peak inflation narrative but also with the Fed’s insistence that there remains work to be done to re-establish price stability,” Ian Lyngen of BMO Capital Markets wrote in a note. Here’s your markets wrap.

Deposits at US lenders fell sharply for a second week following the financial turmoil triggered by the bank collapses earlier in March. Commercial bank deposits dropped by $125.7 billion in the week ended March 22, marking the ninth-straight period of declines, according to data released Friday by the Fed. However, deposits at small banks increased.